International Telephone & Telegraph Corporation

International Telephone & Telegraph Corporation. Founded in 1920 by brothers Sosthenes Behn and Hernand Behn, the corporation began as a Caribbean and Latin American telecommunications operator. Under the legendary leadership of Harold Geneen from 1959, it transformed into one of the world's most powerful and sprawling conglomerates through relentless acquisition. Its dramatic unraveling, marked by scandal and divestiture, left a lasting imprint on global business and regulatory practices.

History

The company's early growth was fueled by securing lucrative telephone service concessions in Puerto Rico, Cuba, and other regions, often with support from the U.S. Department of State. Following World War II, it expanded into Europe, acquiring interests in major manufacturers like Standard Elektrik Lorenz in West Germany. The 1959 appointment of Harold Geneen as CEO marked a pivotal shift; he implemented a rigorous system of management by objectives and financial controls to oversee a vast new empire. During the 1960s and early 1970s, the corporation became synonymous with the conglomerate boom, its stock a darling of Wall Street. However, its fortunes declined after Geneen's 1977 retirement, culminating in a 1995 split into three separate entities: ITT Corporation, ITT Destinations, and ITT Hartford.

Corporate structure and operations

At its zenith, the corporation was a highly decentralized collection of over 250 operating companies managed from its headquarters at 320 Park Avenue in New York City. Geneen's famous monthly management meetings in Brussels or Rome enforced strict financial reporting and profit accountability across diverse divisions. Core operations were organized into several major groups: Telecommunications and Electronics, which included subsidiaries like ITT World Communications; Industrial and Consumer Products, featuring brands such as Wonder Bread and Sheraton Hotels; and Insurance, primarily through the Hartford Fire Insurance Company. This structure allowed it to operate in sectors as varied as defense contracting for the Pentagon, car rental through Avis, and even publishing with Howard W. Sams & Co..

Major acquisitions and divestitures

The corporation's aggressive acquisition strategy defined an era. Landmark purchases included the Hartford Fire Insurance Company in 1970, Sheraton Hotels in 1968, Continental Baking Company in 1968, and Avis in 1965. In telecommunications, it acquired Bell & Howell's electronics division and various European equipment makers. Its hostile takeover attempt of the ABC television network in the 1960s was thwarted by regulatory opposition. The divestiture phase began under pressure from the Justice Department and shareholders; it spun off Levitt & Sons and sold Avis in the 1970s. The largest breakup occurred in the mid-1990s, separating its insurance, industrial, and hospitality arms into independent, publicly traded companies.

Controversies and legal issues

The corporation was embroiled in numerous high-profile scandals. Its involvement in the 1973 Chilean coup d'état, including contacts with the CIA and efforts to undermine the government of Salvador Allende, was exposed by Senate hearings chaired by Frank Church. Domestically, it faced allegations of anti-trust violations, leading to a 1971 consent decree with the Justice Department requiring major divestments. The corporation was also implicated in the Watergate scandal through an illegal $400,000 donation to the CRP to influence a Justice Department settlement. Furthermore, its subsidiary ITT Rayonier faced significant environmental litigation over pollution in Georgia.

Legacy and impact

The corporation's legacy is a complex study in the rise and fall of the conglomerate model. Harold Geneen's management techniques, detailed in books like *Managing*, influenced a generation of executives at companies like General Electric and Tyco International. Its global reach demonstrated the power—and perils—of multinational capital, influencing later debates on corporate governance and business ethics. The scandals directly contributed to reforms like the Foreign Corrupt Practices Act and stricter campaign finance laws. While the original entity is gone, its fragments evolved into significant companies, including Starwood Hotels & Resorts Worldwide (from Sheraton Hotels) and the modern ITT Inc., ensuring its name remains embedded in the landscape of global industry.

Category:Defunct conglomerates of the United States Category:Companies based in New York City Category:Telecommunications companies of the United States